Electronic Funds Transfer (EFT) Toolkit
When compared to paper checks and virtual credit cards (a widely used form of electronic payer-to-provider payment), ACH EFT offers several advantages to physician practices. The AMA urges physicians to consider registering for ACH EFT with their health plans for the following reasons:
(1) Maximize payment amounts
By eliminating the need to commit financial resources to processing and delivering paper checks to the bank, electronic reimbursements maximize claim payments. Unlike payments made via virtual credit cards, which can reduce physician payments by as much as 5%, health plans are required to offer ACH EFT payments that do not have percentage-based processing costs. Standard ACH EFT payments only cost about $0.34 per payment, regardless of the payment amount.
(2) Save time and money spent processing transactions
Paper checks require staff time to open, internally process, and deliver checks to the bank, or payments for lockbox services. As a result, being paid electronically is generally faster than paper checks. Virtual credit cards require staff processing of payments by following health plan instructions and utilizing point of sale (POS) credit card processing equipment. Payments made through ACH EFT are automatically posted to the provider’s bank account, thereby preserving valuable staff time for other administrative tasks.
(3) Reduce risk
ACH EFT payments are processed directly from a health plan’s bank to a physician’s bank over the secure ACH Network. As a result, payments do not face the risks of lost or stolen paper checks or fraudulent use of virtual credit cards.
(4) Optimize processing of electronic remittance advice (ERA)
The healthcare ACH EFT system was designed to ensure easy reconciliation of the Health Insurance Portability and Accountability Act (HIPAA) standard electronic remittance information with payments using the Reassociation Trace Number. Virtual credit card information cannot be carried in compliant HIPAA electronic remittance advice transactions, thereby making reconciliation of payment totals and remittance information challenging and administratively burdensome. Paper checks require manual keying for reassociation with the ERA.
(5) Avoid a shift in payment processing costs
Virtual credit cards place the payment processing costs squarely on the physician through credit card interchange fees. Moreover, many vendors will rebate a percentage of these interchange fees paid by the provider back to the health plan for utilizing the service. ACH EFT eliminates this improper pay structure by keeping more of the contractual payment with the physician. The AMA has created a resource to help physicians understand their rights in order to make ACH EFT work most efficiently for their practice.
For additional information on ACH EFT, please see the EFT toolkit resources below.
- "Getting started: Accepting EFT payments in the physician practice" outlines the steps you should follow for evaluating whether to implement EFT in your practice and how to do so. It also outlines the most common EFT payment options, the features of each, and the costs to accept each payment option.
- Key questions to ask your vendors before signing an EFT agreement
- Know your rights and make ACH EFT work for your practice
- The effect of health plan virtual credit card payments on physician practices details potential concerns regarding virtual credit cards and provides useful information about the benefits of standardized EFT
- EFT and electronic remittance advice (ERA) work hand in hand to streamline remittance and payment processes. Access the AMA's ERA toolkit to learn more about using the ERA transaction
- NACHA guide to understanding EFT payment processing: Take the mystery out of electronic health care payments with the document "ACH Primer for Healthcare: A Guide to Understanding EFT Payment Processing" developed by NACHA – The Electronic Payments Association. Written exclusively for physicians and other health care professionals, this valuable primer will help you understand the basics of EFT, identify steps for moving from paper-based payments to EFTs in compliance with government mandates, and answer your most pressing questions. Experts guide you step-by-step through the Automated Clearinghouse (ACH) Network, explaining transaction flow and applications, and identifying available treasury services which can assist you in leveraging EFT. Transition your staff and operations seamlessly using this free, information-rich resource.
- CMS education on ERA/EFT: Learn how operating rules for EFT/ERA can speed up payment in your practice! View education from CMS about ERA/EFT for guidance and tips on ERA/EFT enrollment and usage.